Social Security is undergoing three significant changes that will impact retirees, workers, and high-income individuals in 2026. These adjustments will affect benefit amounts, tax contributions, and eligibility rules. Understanding these changes is essential for anyone currently receiving or planning to claim Social Security benefits.
1. Cost-of-Living Adjustment (COLA) Increase
In 2026, retirees will see a 2.8% increase in their Social Security payments, starting in January. This Cost-of-Living Adjustment (COLA) is designed to help retirees keep up with inflation and rising living costs. The average increase will be about $56 per month for each retiree, which is higher than the 2.5% increase in 2025 but still below the 3.1% average increase over the past decade.
2. Impact of Earnings on Social Security Benefits
The second major change affects retirees who continue to work after claiming benefits, whether they are early or full retirees.
- For Early Retirees: Social Security will reduce benefits for those under their full retirement age by $1 for every $2 earned above a specified limit. The income limit will increase from $23,400 (or $1,950 per month) in 2025 to $24,800 (or $2,040 per month) in 2026.
- For Full Retirees Continuing to Work: The income limit will be higher for those who reach full retirement age. In 2026, the limit will rise to $65,160 (or $5,430 per month) from $62,160 in 2025. For these retirees, the reduction in benefits will be $1 for every $3 earned over the annual limit.
3. Changes for High-Income Workers
A third significant change is a tax adjustment for higher-income earners. The maximum taxable earnings subject to Social Security FICA taxes will increase from $176,100 in 2025 to $184,500 in 2026. This means that individuals earning above $184,500 will no longer pay Social Security taxes on the excess income.
- Employees and employers will each pay 7.65% of income to Social Security and Medicare, while self-employed individuals will contribute 15.3% in total.
Though income above this threshold will not be taxed in 2026, the maximum taxable earnings threshold is expected to continue rising in future years.
2025 Social Security Payment Schedule
For those receiving Social Security benefits in 2025, payments will continue to be issued on the second, third, and fourth Wednesday of each month. The dates for the payment schedule are as follows:
- January: 8, 15, 22
- February: 12, 19, 26
- March: 12, 19, 26
- April: 9, 16, 23
- May: 14, 21, 28
- June: 11, 18, 25
- July: 9, 16, 23
- August: 13, 20, 27
- September: 10, 17, 24
- October: 8, 15, 22
- November: 12, 19, 26
- December: 10, 17, 24
In December 2025, CalFresh recipients can look forward to receiving their benefits as usual, but it’s important to note the specific dates when funds will be available. December CalFresh Payments: When Recipients Can Expect Their Benefits Next Month—Payments are typically issued on the first of the month, but depending on the county and your case, you may receive your benefits earlier or later. Stay updated with your local office for precise details about your payment schedule to avoid any confusion.
Conclusion
These changes to Social Security will have a substantial impact on both retirees and high-income earners. The COLA increase will provide much-needed relief to retirees, while adjustments to the earnings limits will affect those working while receiving benefits. Additionally, the rise in the maximum taxable earnings threshold for high-income individuals will influence Social Security tax contributions moving forward.
As always, it’s crucial for everyone eligible for Social Security to stay informed about these changes and plan accordingly to maximize their benefits and manage their tax obligations effectively.
FAQs
1. How much will Social Security benefits increase in 2026?
Benefits will increase by 2.8%, translating to an average of $56 per month for retirees.
2. How does continuing to work affect Social Security benefits?
Early retirees will see a $1 reduction for every $2 earned above the income limit. For full retirees, the deduction is $1 for every $3 earned above the higher income limit.
3. Will high-income individuals pay more Social Security taxes in 2026?
Yes, the maximum taxable earnings will increase to $184,500, meaning higher earnings will be subject to Social Security taxes.